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ECONOMY

Germans panic-buy over-priced Swiss houses

Wealthy Germans are being pushed into panic-buying property at sky-high prices in Switzerland as fears grow for the safety of their euro assets, a newspaper reported on Sunday.

Germans panic-buy over-priced Swiss houses
Photo: DPA. 5 star hotel near Vevey, Lake Geneva

“Do something before the euro finally splutters its last cough and dies, taking your assets down with it.” This is the message Swiss investment companies are sending to wealthy Germans, Die Welt said on Sunday.

“Transfer your assets to the most secure democracy in Europe. To Switzerland, where private assets are respected,” reads one newsletter sent out by one unnamed company quoted in the article.

And in the uncertainty of the crisis, some Germans seem to be open to panic, and decide to convert their euros into bricks and mortar, snapping up Swiss property at any price.

Germans seem willing to pay much more than locals for Swiss property, Phillipe Müller, partner at Zurich-based estate agent Kuoni Müller & Partner (KMP) told the paper.

Popular areas with German investors include the historic city centres of Geneva or Zurich or prominent locations on the shores of Lake Geneva – where property can cost up to €52 million.

Unlike during the housing booms seen across Europe in the past decade, said the paper, buyers are not looking for a short term return on their investment, but for long term security – a solid asset that can be passed onto their children.

“A lot of the time its rich German families, very wealthy industrialists, who have floated their companies on the stock exchange or sold them and now have large amounts of liquid assets,” said Müller.

The Local/jlb

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ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

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With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

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